Inventories

3 Months Ended

Dec. 31, 2020

Note 3 – Inventories

Inventories are valued at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price of goods less reasonable costs of completion and delivery. Appropriate consideration is given to obsolescence, excessive levels, deterioration, possible alternative uses and other factors in determining net realizable value. The cost of work in process and finished goods includes materials, direct labor, variable costs and overhead. The Company evaluates the need to record inventory adjustments on all inventories, including raw material, work in process, finished goods, spare parts and used equipment. Used equipment acquired by the Company on

trade-in

from customers is carried at estimated net realizable value. Unless specific circumstances warrant different treatment regarding inventory obsolescence, an allowance is established to reduce the cost basis of inventories three to four years old by 50%, the cost basis of inventories four to five years old by 75%, and the cost basis of inventories greater than five years old to zero. Inventory is typically reviewed for obsolescence on an annual basis computed as of September 30, the Company’s fiscal year end. If significant known changes in trends, technology or other specific circumstances that warrant consideration occur during the year, then the impact on obsolescence is considered at that time.

Net inventories at December 31, 2020 and September 30, 2020 consist of the following:


	December 31, 2020		September 30, 2020
Raw materials	$	25,430,000	$	14,607,000
Work in process		1,874,000		3,633,000
Finished goods		8,129,000		8,810,000
Used equipment		40,000		40,000

	$	35,473,000	$	27,090,000

Included in raw materials at December 31, 2020 was approximately

$11.0

million of inventory acquired in the Blaw-Know acquisition.

Slow-moving and obsolete inventory allowances were $4,966,000 and $4,617,000 at December 31, 2020 and September 30, 2020, respectively.